Alphabet Class A (GOOGL) AI Stock Analysis

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Alphabet Class A

(NASDAQ:GOOGL)

Rating:84Outperform

Price Target:

$197.00

▲(12.12%Upside)

Alphabet's strong financial performance and strategic growth initiatives, particularly in AI and cloud services, are key strengths. The moderate technical and valuation scores suggest a balanced risk-reward profile. Positive earnings call insights and strategic corporate events further bolster the stock's outlook, despite some challenges in advertising revenue and expenses.

Positive Factors

AI Capabilities

AI capabilities are driving incremental mobile usage for Google, with mobile daily active users increasing by 12% year over year.

Cloud Business

Adding a leading AI player as a customer is a significant and potentially material win for GOOGL's cloud business.

Search Monetization

AI can expand overall search monetization by better understanding the intent behind complex and long-tail queries.

Negative Factors

Bargaining Power

New options could reduce Google’s bargaining power with Samsung and other Android OEMs.

Market Dominance

Google's global search share declined marginally in May, indicating a slight loss in market dominance.

User Engagement

In the US, Google visits were down 2% year over year, showing challenges in maintaining user engagement.

Alphabet Class A (GOOGL) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.18T

Dividend Yield0.47%

Average Volume (3M)41.71M

Price to Earnings (P/E)19.9

Beta (1Y)1.03

Revenue Growth13.02%

EPS Growth37.73%

CountryUS

Employees185,719

SectorCommunication Services

Sector Strength90

IndustryInternet Content & Information

Share Statistics

EPS (TTM)2.81

Shares Outstanding5,820,000,000

10 Day Avg. Volume39,027,414

30 Day Avg. Volume41,708,857

Financial Highlights & Ratios

PEG Ratio-0.99

Price to Book (P/B)4.50

Price to Sales (P/S)0.00

P/FCF Ratio19.21

Enterprise Value/Market Cap0.53

Enterprise Value/Revenue0.84

Enterprise Value/Gross Profit5.51

Enterprise Value/Ebitda2.21

Forecast

1Y Price Target

$199.11

Price Target Upside13.32% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering38

Alphabet Class A Business Overview & Revenue Model

Company DescriptionAlphabet Inc. is a multinational conglomerate headquartered in Mountain View, California. It was created through a corporate restructuring of Google on October 2, 2015, and became the parent company of Google and several former Google subsidiaries. Alphabet operates in various sectors, including technology, life sciences, investment capital, and research and development. Its core products and services range from its search engine and advertising services to cloud computing, consumer electronics, and various other technology initiatives.

How the Company Makes MoneyAlphabet Inc. primarily generates revenue through its subsidiary Google, with the majority coming from advertising services. Google's advertising revenue is driven by ads displayed on its search engine, as well as on partner websites through the Google AdSense program. Additionally, Alphabet earns substantial income from its YouTube platform, which monetizes through advertisements and subscription services like YouTube Premium. The company also generates revenue from its Google Cloud services, which offer cloud computing solutions to businesses. Other Alphabet ventures, such as its 'Other Bets' segment, contribute to revenue through varied business models, including investments in life sciences and technology innovations, though these are less significant compared to Google's advertising and cloud services. Key partnerships and collaborations, such as those with smartphone manufacturers for Android OS, also play a role in its revenue generation.

Alphabet Class A Key Performance Indicators (KPIs)

Any

Cloud Operating Margin

Cloud Operating Margin
Measures profitability of the cloud segment, highlighting efficiency and competitiveness in a key growth area for the company.

Chart InsightsAlphabet's Cloud Operating Margin has turned positive since early 2023, showing substantial improvement and reaching 17.8% by early 2025. This turnaround aligns with a 30% year-over-year increase in Google Cloud revenue, driven by AI advancements and infrastructure expansion. However, the company faces challenges with cloud capacity constraints, which could impact future growth. Despite these constraints, Alphabet's strategic investments in AI and technical infrastructure signal a commitment to sustaining this upward momentum in cloud profitability.

Data provided by:

Main Street Data

Alphabet Class A Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: 10.44%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Positive

The earnings call presented a predominantly positive outlook with strong revenue growth across major segments, significant advancements in AI technology, and milestones for YouTube and Waymo. However, challenges such as a decline in network advertising revenue, increased depreciation expenses, and potential headwinds in ad revenues due to macroeconomic factors were acknowledged.

Q1-2025 Updates

Positive Updates

Strong Revenue Growth

Alphabet Inc. reported consolidated revenues of $90.2 billion for Q1 2025, an increase of 12% year-over-year, with Search, YouTube advertising, subscription platforms, and Google Cloud all experiencing double-digit growth.

AI Innovations and Adoption

AI advancements such as AI Overviews have been well received, with over 1.5 billion users monthly. The Gemini 2.5 Pro AI model has been launched, achieving high performance and recognition within the industry.

YouTube and Waymo Milestones

YouTube celebrated its twentieth anniversary with over 1 billion monthly active podcast users and 125 million subscribers to YouTube Music and Premium. Waymo is now serving over a quarter of a million paid passenger trips weekly, a fivefold increase from the previous year.

Google Cloud Growth

Google Cloud revenues increased by 28% to $12.3 billion, driven by growth in GCP core and AI products.

Operating Income and Margin Expansion

Operating income increased by 20% to $31 billion, and the operating margin increased to 33.9%, reflecting strong revenue growth and a favorable mix shift.

Negative Updates

Network Revenue Decline

Network advertising revenue decreased by 2% to $7.3 billion, reflecting a year-over-year decline.

Increased Depreciation Expenses

Depreciation expenses increased significantly, putting pressure on the income statement, with expectations for further acceleration throughout 2025.

Headwinds in Advertising Revenue

Uncertainties in the macro environment and changes to de minimis exemption are expected to create slight headwinds in advertising revenue, particularly affecting APAC-based retailers.

Company Guidance

During the first quarter of 2025, Alphabet Inc. reported strong financial performance with notable metrics highlighted during their earnings call. Consolidated revenues reached $90.2 billion, marking a 12% increase year-over-year, with Google services revenues growing by 10% to $77.3 billion and Google Cloud revenue increasing by 28% to $12.3 billion. The company's operating income rose by 20% to $31 billion, resulting in an operating margin of 33.9%. Subscriptions surpassed 270 million, driven by YouTube and Google One, while AI Overviews reached over 1.5 billion monthly users. The company also celebrated YouTube's 20th anniversary, with YouTube Music and Premium reaching over 125 million subscribers. Additionally, Waymo reported over a quarter of a million paid passenger trips weekly, a fivefold increase from the previous year. Despite facing headwinds from increased depreciation expenses, Alphabet continues to focus on productivity and efficiency to support its investment in AI and other growth areas.

Alphabet Class A Financial Statement Overview

Summary

Alphabet showcases exceptional financial performance with strong revenue growth, high profit margins, and a robust balance sheet. The income statement highlights a 16.9% revenue growth rate, a 30.9% net profit margin, and solid cash flow management, indicating financial stability and growth potential.

Income Statement

Very Positive

Alphabet's income statement shows impressive financial health with a strong gross profit margin of 58.6% and a net profit margin of 30.9% for TTM. The company’s revenue growth rate is robust at 16.9% over the past year, indicating strong market demand and operational efficiency. The EBIT margin of 32.7% and EBITDA margin of 37.3% further highlight Alphabet's profitability. This combination of growth and high margins reflects a well-managed, profitable enterprise with a strong competitive position in the industry.

Balance Sheet

Very Positive

Alphabet maintains a solid balance sheet with a low debt-to-equity ratio of 0.07, indicating minimal financial leverage and a strong equity position. The equity ratio of 72.6% reflects a robust capital structure primarily funded by equity. Return on Equity (ROE) is high at 32.1%, showing efficient use of shareholder funds to generate profits. Overall, Alphabet's balance sheet is strong, with ample liquidity and low financial risk.

Cash Flow

Very Positive

The cash flow statement reveals strong cash management practices with a free cash flow growth rate of 2.9%, indicating Alphabet's ability to generate and grow cash flows. The operating cash flow to net income ratio of 1.2 shows that the company converts a significant portion of its income to cash, enhancing its financial flexibility. Additionally, the free cash flow to net income ratio of 0.67 suggests solid cash flow generation relative to profits, supporting future growth initiatives and shareholder returns.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
359.71B	350.02B	307.39B	282.84B	257.64B	182.53B
	Gross Profit
210.76B	203.71B	174.06B	156.63B	146.70B	97.80B
	EBIT
117.52B	112.39B	84.29B	74.84B	78.71B	41.22B
	EBITDA
149.88B	135.39B	97.97B	85.16B	103.52B	61.91B
	Net Income Common Stockholders
111.00B	100.12B	73.80B	59.97B	76.03B	40.27B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
95.33B	95.66B	110.92B	113.76B	139.65B	136.69B
	Total Assets
475.37B	450.26B	402.39B	365.26B	359.27B	319.62B
	Total Debt
23.56B	25.46B	27.12B	29.68B	26.21B	25.08B
	Net Debt
300.00M	2.00B	3.07B	7.80B	5.26B	-1.39B
	Total Liabilities
130.11B	125.17B	119.01B	109.12B	107.63B	97.07B
	Stockholders Equity
345.27B	325.08B	283.38B	256.14B	251.63B	222.54B
Cash Flow		Free Cash Flow
74.88B	72.76B	69.50B	60.01B	67.01B	42.84B
	Operating Cash Flow
132.60B	125.30B	101.75B	91.50B	91.65B	65.12B
	Investing Cash Flow
-53.17B	-45.54B	-27.06B	-20.30B	-35.52B	-32.77B
	Financing Cash Flow
-80.22B	-79.73B	-72.09B	-69.76B	-61.36B	-24.41B

Alphabet Class A Technical Analysis

Technical Analysis Sentiment

Positive

Last Price175.70

Price Trends

50DMA

161.69

Positive

100DMA

169.80

Positive

200DMA

171.15

Positive

Market Momentum

MACD

3.78

Negative

RSI

61.07

Neutral

STOCH

75.43

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOOGL, the sentiment is Positive. The current price of 175.7 is above the 20-day moving average (MA) of 170.35, above the 50-day MA of 161.69, and above the 200-day MA of 171.15, indicating a bullish trend. The MACD of 3.78 indicates Negative momentum. The RSI at 61.07 is Neutral, neither overbought nor oversold. The STOCH value of 75.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GOOGL.

Alphabet Class A Risk Analysis

Alphabet Class A disclosed 28 risk factors in its most recent earnings report. Alphabet Class A reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Alphabet Class A Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GOOG	87 Outperform	$2.18T	20.07	34.79%	0.47%	13.02%	37.73%
GOOGL	84 Outperform	$2.18T	19.92	34.79%	0.47%	13.02%	37.73%
META	82 Outperform	$1.77T	27.40	39.83%	0.30%	19.37%	47.56%
PINS	77 Outperform	$23.76B	12.62	48.41%	―	17.81%	1175.52%
SPOT	76 Outperform	$139.21B	114.59	24.28%	―	16.07%	―
BIDU	74 Outperform	$30.61B	8.68	9.85%	―	-1.33%	32.92%
Sector *	61 Neutral	$14.75B	5.86	-3.99%	6.11%	2.67%	-30.24%

* Communication Services Sector Average

Performance Comparison

GOOGL

Alphabet Class A

175.70

1.38

0.79%

BIDU

Baidu

87.81

-6.18

-6.58%

Alphabet Class A Corporate Events

Executive/Board ChangesShareholder Meetings

Alphabet Stockholders Re-elect Directors at Annual Meeting

Neutral

Jun 12, 2025

At Alphabet Inc.’s Annual Meeting of Stockholders on June 6, 2025, stockholders voted on fifteen proposals, including the election of directors and various stockholder proposals. The election of directors saw the re-election of key figures such as Larry Page and Sundar Pichai. However, several stockholder proposals, including those related to shareholder rights, financial performance policies, and AI-related reports, were not approved. The ratification of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025, was approved.

The most recent analyst rating on (GOOGL) stock is a Buy with a $200.00 price target. To see the full list of analyst forecasts on Alphabet Class A stock, see the GOOGL Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy

Alphabet Inc. Completes €6.75 Billion Bond Offering

Positive

May 6, 2025

On May 6, 2025, Alphabet Inc. successfully completed its euro-denominated bond offering, raising a total of €6.75 billion through the issuance of notes with varying maturities and interest rates. This strategic financial move is expected to enhance Alphabet’s capital structure and provide additional resources for its ongoing operations and growth initiatives.

M&A TransactionsBusiness Operations and Strategy

Alphabet Class A to Acquire Wiz for $32 Billion

Positive

Mar 18, 2025

On March 18, 2025, Google LLC announced its agreement to acquire Wiz, Inc., a prominent cloud security platform, for $32 billion in an all-cash transaction. This acquisition, expected to close in 2026, will integrate Wiz into Google Cloud, enhancing its security offerings and multicloud capabilities. The acquisition aims to bolster Google’s position in the rapidly growing cloud security market by improving security automation and reducing costs for customers. Wiz’s solutions will remain compatible with major cloud platforms, and the deal underscores the increasing importance of cybersecurity in the AI era.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.